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Commercial Property Investment Foundations, Ep 290

NZ Everyday Investor

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Adding Value to Commercial Property

If you have a building that's got a $100,000 a year lease, and it's a high risk building, 10 might be on a month by month lease. So to compensate for the risks, I want a 10% return, therefore the building's worth a million dollars. You could then going a step further if there were some other risks associated with that commercial property, like maybe there was some earthquake risk or something like that. If you could easily deal to that, then the cap rate that someone would require would go even lower,. which then bumps up the value and more, right? Yeah, that's another way to add value to commercial property as well.

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